With effect from April 1, 2025, a variety of modifications to the Tax Deducted at Source (TDS) regulations will impact interest, dividends, rent, commissions, and other types of income. The government increased the TDS threshold in several categories to enhance cash flow and reduce the tax burden on individuals. These improvements will assist older persons, small investors, and commission-based professionals.
A thorough examination of the updated TDS thresholds may be found here.
Higher TDS Threshold For Senior Citizens
As of April 1, 2025, the senior citizen threshold limit has been quadrupled. For senior persons, interest income from fixed deposits (FDs), recurring deposits (RDs), etc., would only be deductible if the total amount in a bank during a fiscal year surpasses Rs 1 lakh. This implies that the bank would not impose any TDS if an elderly person maintains interest income below Rs 1 lakh.
Higher TDS Threshold For General Citizens
With effect from April 2025, the government raised the TDS threshold on interest income for non-senior people (generic citizens) from Rs 40,000 to Rs 50,000. The goal of the action is to lessen the tax burden on depositors, especially those who depend on FD interest as their main source of revenue. According to the updated regulations, if the total yearly interest sum exceeds Rs 50,000, the bank would collect TDS. However, if a regular person keeps their interest income under Rs 50,000, the bank would not collect any TDS.
TDS On MFs Or Stocks
The exemption limit on dividends and income received from mutual fund (MF) units or specific firms has been raised from Rs 5,000 to Rs 10,000, which will benefit investors in stocks or MFs.
Threshold Hiked To Rs 10,000 For TDS On Dividend
Additionally, the dividend tax deduction threshold limit was increased from Rs 5,000 to Rs 10,000 by the budget. Since tax would be withheld at the source when dividend income above Rs 10,000, the new cap will enable investors in stocks and mutual funds to hold onto more money beginning of April 1, 2025.
Increased TDS Threshold For Commissions On Broking And Insurance
To help insurance agents and brokers, the Budget 2025 also increased the TDS threshold for several commissions. With effect from April 1, 2025, the TDS threshold for insurance commission has been raised from Rs 15,000 to Rs 20,000. Certain adjustments are intended to improve cash flow for small earners in certain industries and lessen the cost of compliance.
TDS On Rent
TDS threshold increase for home property rent under section 194-I. If the rent payment is Rs 50,000 per month or a portion of a month or more, TDS on the home rent must now be subtracted from the rent. In the past, this barrier applied if the annual rent payment surpassed Rs 2.4 lakh. Up till FY 2018–19, this threshold limit was Rs 1,80,000. The change will become operative on April 1, 2025.
